Q: Economy of India: Is consolidation of banks as suggested recently a good step? What are its flaws?
The Indian government has been talking of a merger of Public Sector Banks ever since I was a child. Now, I have a child. It has not happened at all. Thus, I will be a bit skeptical on about what the Finance Minister is talking about.
I think India's government run banks need to be merged into a few healthy banks. Indian banking system is in dire straits with a huge level of non-performing assets. There has been widespread NPA fraud in banks such as IOB and Syndicate Bank that is threatening their fundamentals. Merging the banks would give them enough balance to fight a potential bank run.
Merging them would leave a few large banks that can then attempt to grow globally like SBI has been doing. And overall it would improve the efficiency of the system.
Q: What are biggest deaths of companies in the history?
Large companies tend to die in groups, usually at the start or during a major economic crisis.
The most spectacular of the collapses is of Lehman Brothers - a company that had nearly $700 billion in "assets". That set off a chain of events resulting in the biggest financial crisis in 8 decades. Lehman had 100s of billions in assets, but when the markets went crazy no one had the time and patience to value all those assets. Everything had to go on a fire sale. Bankruptcy of Lehman Brothers
It filed for bankruptcy and relatively quickly split into two and sold to Barclays and Nomura. Other companies that collapsed around this period are Bear Stearns, Countrywide and Washington Mutual. These all lost their identities and sold off. Other companies like Freddic Mac and Fannie Mae were taken over by the government and restored to their past identities.
At the heights of dotcom crisis of 2001, a number of tech companies collapsed. One of the unlikely candidates of this collapse is Enron. It was supposed to be an energy company, but tried to make things so "sophisticated" that no one had a clue of what was happening. At that time the most glamorous investments were those people had no clue of. Eventually it was found that some of the smartest crooks were behind the company. The Enron scandal also brought down among the largest accounting companies - Arthur Anderson. While everyone was thinking Enron would be the largest bankruptcies for a long time, within months came a much bigger blow through Worldcom - audited by the same bunch of crooks as Enron.
In transportation industry, the most spectacular of the falls is the one of PanAm - Pan American World Airways - among the most respected airline brands. It was a followed by a long chain of US transportation brands - including American Airlines and GM falling to disgrace through bankruptcy filings - although they were restored.
If we take the whole of world history, I would say the most spectacular death of a company came in 1873 with the dissolution of the East India Company. Until 1857, this company ruled nearly a quarter of the world population and unrivalled in power and influence. Two decades later it was totally dissolved and lost all its identity. East India Stock Dividend Redemption Act 1873
(The author of this article, Mr.Balaji Vishwanathan, is a Top Writer on Quora with 216,000 Followers)
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